Approaches an EO can promote (3)

While it can be difficult for EOs to track policy implementation, they can and should advocate that government put in place mechanisms to track policy implementation.

The key is to encourage a culture of systematic legislative and regulatory review. Governments find narrow and one-off reforms very appealing because such reforms seem to promise rapid results and provide quick fixes. Systematic approaches are more complex for government.(1)

Predictable and systematic procedures for making regulations improve the transparency of the regulatory system and the quality of decisions. These include forward planning (the periodic listing of forthcoming regulations), administrative procedures for the management of rule-making, and procedures to secure the legal quality of new regulations (including training and guidance for legal drafting, plain language drafting, and oversight by expert bodies).

RIA is therefore a key tool in helping ensure that regulation does what it mostly sets out to achieve. For EOs it is vital part of the regulatory arsenal that government should equip itself with.

Below is a framework EOs can promote to government to improve regulatory frameworks.

EO Recommendation on drafting regulation(2)

1. Up to the government to make the case for regulation

Governments must only regulate when necessary. The burden of proof that a regulation is necessary remains with the proponents of regulatory action.

2. Have benefits that exceed costs

By thoroughly testing the impact of regulation on business and by ensuring that the proposed regulation focuses on the core problem, with minimal other impacts on business.

3. Minimize the impact of regulation on business

Legislation should entail the minimum necessary amount of regulation to achieve the objectives. Regulate in a way that is proportionate to the risk being addressed. Government must consider all options, including that of “doing nothing”.

4. Minimizing the impact on competition

Regulation should be designed to have minimal impact on competition. Regulation should avoid imposing barriers to entry, exit or innovation.

Wherever possible, regulatory measures or standards should be compatible with relevant international or internationally accepted standards or practices in order to minimize the impediments to trade.

7. Regulations should not restrict international trade

There should be no discrimination in the way regulatory measures, mandatory standards or conformity procedures are applied between domestic products or imported products, nor between imports from different supplying countries. Regulations should not be applied in a way that creates unnecessary obstacles to international trade.

8. Regular review of regulation

Regulation should be reviewed periodically. Review should take place at intervals of no more than 10 years.

9. Flexibility of standards and regulations

Regulatory measures should be capable of revision to enable them to be adjusted and updated as circumstances change. Amendments to regulatory measures and instruments must not result in undue uncertainty in business operations and in so doing, impose excessive costs.

10. The exercise of bureaucratic discretion

Good regulation should attempt to standardize the exercise of bureaucratic discretion, so as to reduce discrepancies between government regulators, reduce uncertainty and lower compliance costs for business.

11. Minimize regulatory burden

Legislation should entail the minimum necessary regulation to achieve the objectives. When designing measures or standards, regulators should ensure that the potential regulatory burden of alternative measures on the business community is identified. Non-regulatory alternatives to regulation should be explicitly considered, including the option of not introducing new regulation.

12. Minimize administrative burden

Regulators should develop standards or regulatory measures in a way that minimizes the administration and enforcement requirements for enterprises. Particular attention should be paid to minimizing the impact in instances where different levels of government are involved.

13. Regulatory impact assessment

Proposed regulation should be subject to a regulatory impact assessment process, which quantifies the costs and benefits of the proposal on business to the greatest extent possible. Incentive effects should also be made explicit in any regulatory proposal.

14. Compliance strategies and enforcement

Regulatory measures should contain compliance strategies which ensure the greatest degree of compliance at the lowest cost to enterprises. Incentive effects should be made explicit in any regulatory proposals. Measures to encourage compliance may include regulatory clarity, brevity, education and consultation and the choice of alternative regulatory approaches with compliance in mind.

15. Consideration of secondary effects

Regulatory measures should be designed and/or alternative approaches to regulation chosen with explicit consideration of secondary effects and the nature of these effects outlined.

16. Plain language drafting

Where possible, regulatory instruments should be drafted in ‘plain language’ to improve clarity and simplicity, reduce uncertainty and enable business to understand better the implications of regulatory measures. Business must be able to easily understand their rights and obligations under the regulation.

17. Date of effect

The dates of commencement of proposed standards and regulatory measures should be carefully planned to avoid or mitigate unintended or unnecessary market consequences, such as to allow transition by enterprises to compliance with new regulatory requirements.

18. Transparency

Make all new draft legislation available to business for consultation as soon as possible.

(1) Regulatory Impact Analysis: A Tool For Policy Coherence OECD2009.

(2) This section is adapted from the Council of Australian Governments (2004) Principles and Guidelines for National Standard Setting and Regulatory Action by Ministerial Councils and Standard-Setting Bodies.